Share

Regulator keeps right to accredit agents

Johannesburg - The National Credit Regulator (NCR) has won an important case in the North Gauteng High Court which confirms it is entitled to accredit payment distribution agents as part of the debt review process.

On Tuesday, the NCR said that, under the National Credit Act (NCA), overindebted consumers were entitled to apply for their debts to be rearranged through a registered debt counsellor.

As part of this process, consumers were still required to make repayments to their credit providers, although this might be at a reduced monthly rate.

"Because vast amounts of money have to be collected from consumers and paid to credit providers, the NCR developed a system to control the receipt and distribution of consumers' payments to the credit providers.

"From the commencement of the system to the end of June 2010 a total of R2.1bn had been distributed by the payment distribution agents to various credit providers."

Peter Setou, the NCR's senior manager for education and strategy, said his organisation had found that rearranged payments should not be left to the consumer to make because their overindebtedness was often the result of them being unable to manage their own financial affairs.

"The requirement that payment be made, not by the consumer, but rather by an appointed agent, underpins the effectiveness of the debt review process," he said.

However, the NCR had became concerned about what it termed "the criminal behaviour" of some debt counsellors and unaccredited paying agencies, which had resulted in consumers' monies being stolen or not being paid over to creditors.

"If a consumer under debt review fails to comply with the relevant provisions of the NCA while under debt counselling, the process can be terminated and credit providers can take legal action to recover the debt," Setou noted.

To curb the theft of consumer money and maladministration, the NCR issued a tender two years ago and accredited five payment distribution agents.

This was done to prevent the risk of loss to consumers through misappropriation of repayments while consumers were under debt counselling.

"In accrediting these payment distribution agents, audits were undertaken to ensure that such entities have the requisite infrastructure to perform the function of payment distribution," Setou said.

"The NCR also ensures that such entities have adequate insurance cover to compensate consumers in cases of loss."

However, Debt Monitoring SA, which had been collecting money from overindebted customers despite not being an accredited payment distribution agent, had applied to the high court to order it to have the NCR approve the company as a payment distribution agent.

It also wanted the NCR to stop preventing debt counsellors from engaging or rendering payment distribution services to credit providers on behalf of their clients.

Debt Monitoring SA argued that the NCR should not impose as a condition of registration that debt counsellors only be allowed to use accredited payment distribution agents.

"If debt counsellors were allowed to carry out payment distribution, the NCR would not be able to monitor and control the system as it is able to do now," Setou said, adding that the court had dismissed Debt Monitoring SA's application, with costs.

"This judgment has strengthened the NCR's resolve to ensure that consumers' and credit providers' interests are protected in the debt counselling process.

"The NCR will continue to enforce the act and specifically ensure that debt counsellors only use accredited payment distribution agents."

Consumers were also urged to check whether their debt counsellors were using accredited payment distribution agents.

"If in doubt they should contact the NCR," Setou said.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.04
-0.7%
Rand - Pound
23.98
-0.4%
Rand - Euro
20.53
-0.3%
Rand - Aus dollar
12.36
-0.1%
Rand - Yen
0.13
-0.7%
Platinum
894.10
-0.3%
Palladium
996.00
-0.6%
Gold
2,194.02
-0.0%
Silver
24.42
-0.9%
Brent Crude
86.09
-0.2%
Top 40
67,905
+0.3%
All Share
74,106
+0.3%
Resource 10
56,200
+1.0%
Industrial 25
103,604
+0.3%
Financial 15
16,488
-0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders